Cox Communications Owners' $8bn Buyout Offer

03 August 2004

Cox Enterprises, the parent of US cable network Cox Communications, hopes to transform the company into a private operation by purchasing all outstanding publicly held shares for almost $8 billion (€6.6bn; £4.4bn).

The offer of $32 a share, in cash, is for the 38% of the company owned by public shareholders such as Bill Gates, who holds a 5.7% stake.

CE owns the remaining 62% of CI and wants to end the ten-year run of the fourth largest cable company in the US as a publicly listed enterprise.

Despite investing heavily in network upgrades and providing services such as video on demand, second quarter results for CC show that the net income of $52.7m was less than half that for the same period last year. Its performance does appear to be gradually improving this year, however, as revenue rose by 12% to $1.6bn over the previous quarter.

Shareholders are becoming nervous about increased competition from satellite and telecoms companies, and the current low value of shares places CI's offer at a 16% premium over last Friday's closing share price.

Consequently, CE chairman/ceo James C Kennedy views his company's offer as "an excellent opportunity for CC shareholders, giving them the ability to receive a meaningful premium to recent trading values."

A special committee of independent directors is expected to evaluate the proposal with assistance from external financial and legal advisors.

Data sourced from: Financial Times; additional content by WARC staff